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Old 10.05.2010, 12:59
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There are bad ideas... [trillion dollar support package for the Euro]

... then there's this:

http://www.bloomberg.com/apps/news?p...d=aeHrwqUq9G9A
European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases as they spearheaded a global drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro. Jolted into action by last week’s slide in the currency and soaring bond yields in Portugal and Spain, the 16 euro nations agreed to offer financial assistance worth as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank will counter “severe tensions” in “certain” markets by purchasing government and private debt.
“The message has gotten through: the euro zone will defend its money,” French Finance Minister Christine Lagarde told reporters in Brussels early today after the 14-hour meeting.
http://www.bloomberg.com/apps/news?p...d=aR40Tn7EZtfg
The European Central Bank said it will buy government and private bonds as part of an historic bid to stave off a sovereign-debt crisis that threatens to destroy the euro.
The ECB wants “to address severe tensions in certain market segments which are hampering the monetary policy transmission mechanism and thereby the effective conduct of monetary policy,” the central bank said in a statement today, minutes after European finance ministers announced a loan package worth almost $1 trillion to staunch the market turmoil. The central bank said it will intervene in “those market segments which are dysfunctional,” signaling it views the recent surge in some of the region’s bond yields as unjustified. Policy makers are seeking to restore confidence in markets and protect the economy from a double-dip recession. The bank said the moves won’t affect monetary policy and the resulting liquidity will be reabsorbed.
Wake up! Greece is going to default. Spain is going to default. Portugal is going to default. Time to stop tilting at the debt windmills...
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  #2  
Old 10.05.2010, 13:09
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Re: There are bad ideas...

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Greece is going to default. Spain is going to default. Portugal is going to default. Time to stop tilting at the debt windmills...
Eu 750bn certainly won't solve the problems in the Eurozone. It's the price of stabilizing sentiment - as in the subprime crisis it's all about propping up confidence. Whether that'll be enough to do even that, only time will tell.
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Old 10.05.2010, 18:46
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Re: There are bad ideas... FAIL OF TEH (SIC) DAY

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Old 11.05.2010, 15:00
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Re: There are bad ideas... [trillion dollar support package for the Euro]

http://www.telegraph.co.uk/finance/f...purchases.html
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Old 11.05.2010, 15:14
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Re: There are bad ideas... [trillion dollar support package for the Euro]

I believe the program might work IF PIIGS do start saving and properly cut their expenditures. The size and extent of the program was much larger than expected, particularly impressive was how Germany stood behind it

EU leaders have shown their support to the EU idea.. now PIIGS have to show that they can stick to the austerity plan instead of giving in to domestic pressure
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Old 11.05.2010, 15:19
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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I believe the program might work IF PIIGS do start saving and properly cut their expenditures.
Or hell freezes. (Why should they? Looks like they can get money for free from other countries tax payers if they need it...)

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The size and extent of the program was much larger than expected, particularly impressive was how Germany stood behind it
I was surprised as well. I did not vote for Angie last time... and this just settled my next vote.
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Old 11.05.2010, 15:29
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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Or hell freezes. (Why should they? Looks like they can get money for free from other countries tax payers if they need it...)
What if they do not stick to the austerity measures...
What happens then... EU exit + default?!

I do not think Greece would like to leave the safety umbrella of the EU (Germany would love to see the Greeks leave for sure). They might be tempted by the short-term relief of a debt default but longer term it is not advisable

Recently I read somewhere that majority of the Greeks were for the austerity measures (not a large one though)
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Old 11.05.2010, 16:00
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Re: There are bad ideas... [trillion dollar support package for the Euro]

Hahahahahaha - when hell freezes over as Treverus so nicely put it.

I can tell you what one of the PIGS is doing - firing government staff only to outplace them into NGO's with government subsidies. Austerity - my a$$.



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I believe the program might work IF PIIGS do start saving and properly cut their expenditures.
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Old 11.05.2010, 18:07
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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... then there's this:

http://www.bloomberg.com/apps/news?p...d=aeHrwqUq9G9A
European policy makers unveiled an unprecedented loan package worth almost $1 trillion and a program of bond purchases as they spearheaded a global drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro. Jolted into action by last week’s slide in the currency and soaring bond yields in Portugal and Spain, the 16 euro nations agreed to offer financial assistance worth as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank will counter “severe tensions” in “certain” markets by purchasing government and private debt.
“The message has gotten through: the euro zone will defend its money,” French Finance Minister Christine Lagarde told reporters in Brussels early today after the 14-hour meeting.
http://www.bloomberg.com/apps/news?p...d=aR40Tn7EZtfg
The European Central Bank said it will buy government and private bonds as part of an historic bid to stave off a sovereign-debt crisis that threatens to destroy the euro.
The ECB wants “to address severe tensions in certain market segments which are hampering the monetary policy transmission mechanism and thereby the effective conduct of monetary policy,” the central bank said in a statement today, minutes after European finance ministers announced a loan package worth almost $1 trillion to staunch the market turmoil. The central bank said it will intervene in “those market segments which are dysfunctional,” signaling it views the recent surge in some of the region’s bond yields as unjustified. Policy makers are seeking to restore confidence in markets and protect the economy from a double-dip recession. The bank said the moves won’t affect monetary policy and the resulting liquidity will be reabsorbed.
Wake up! Greece is going to default. Spain is going to default. Portugal is going to default. Time to stop tilting at the debt windmills...
The E.U. very simply cannot allow anyone "going to default". The structures established now should have been put in place right when the Euro was started. I still remember when in Italy, people used 1000 Lira notes to stabilize restaurant tables ! The whole of the Mediterranean part was economically and financially unstable, and the whole E.U. bunch should have known it. When Winston Churchill spoke about the weak underbelly of Europe he not only had the Arab World in mind but of course Portugal, Spain, Italy and Greece as well

Germany and France losing money ? Not at all ! As Greece is a major importer of German and French merchandise.

In short, the E.U. will have to mobilize more forces in order to stabilize the structure, which as such is a very good thing, exactly to the stronger members of the Union.
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Old 11.05.2010, 18:14
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Re: There are bad ideas... [trillion dollar support package for the Euro]

I read the Swiss central bank is spending a ton to artificially retain a parity with the Euro, namely because it is an "export country." Would it really be so bad to walk away from a Euro pegged at 1.40 chf? Perhaps the franc could enjoy a kind of renaissance as a reserve currency.

It seems like a bad move to try to keep parity with a sinking ship. (sorry if my logic is unreasonable...I am no economist, but would like to learn more.)
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Old 11.05.2010, 18:20
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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Germany and France losing money ? Not at all ! As Greece is a major importer of German and French merchandise.
A salesman once told me that there is nothing more important than selling. I added 'almost, it stands just behind getting paid'.
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Old 11.05.2010, 19:01
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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I read the Swiss central bank is spending a ton to artificially retain a parity with the Euro, namely because it is an "export country." Would it really be so bad to walk away from a Euro pegged at 1.40 chf? Perhaps the franc could enjoy a kind of renaissance as a reserve currency.

It seems like a bad move to try to keep parity with a sinking ship. (sorry if my logic is unreasonable...I am no economist, but would like to learn more.)

I am not an ecconomist but the SFr. will get devalued at least 10% towards US, AU,HK, Can.-Dollar and other currencies, it would make sense to keep the swiss currency more stable to protect the pentioneers and savers money because banks and insurances earn now with the peoples savings billions with carry trades. But the politician will not want to have any interest in a weekening industry, so when the euro falls the CH will fall with, no matter if you get only 1% rates for your SFr.savings. But in Germany or France 5% for the same amount.

If i were a a pension found manager, i only would keep 10% swiss currency. Remember, Switzerland is ruled and owed by the Banks.
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Old 11.05.2010, 21:25
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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Hahahahahaha - when hell freezes over as Treverus so nicely put it.

I can tell you what one of the PIGS is doing - firing government staff only to outplace them into NGO's with government subsidies. Austerity - my a$$.
to be honest, they would have to be stupid to accept any real austerity measures.

why bother with the pain? they will certainly get bailed out again ...
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Old 11.05.2010, 22:03
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Re: There are bad ideas... [trillion dollar support package for the Euro]

what puzzles me is why there are no Germans on the streets demonstrating against this bailout... i mean DE is getting f-d here...

as I see this we are seeing the end of capitalism as we know it...communism finished itself by bancrupting itself by trying to keep up with the arms race now the huge Monopoly game of Western world free trade set-up is slowly falling apart..
Let us not forget that US is in deep poop as well...debt payments are coming due...and why on earth is no one talking about UK's and Italy's debt???
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Old 11.05.2010, 22:21
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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e...and why on earth is no one talking about UK's and Italy's debt???
Some are, and for a long time, but not listened enough to!
Its not popular to be responsible and to promote responsibility.

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Old 11.05.2010, 22:22
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Re: There are bad ideas... [trillion dollar support package for the Euro]

The European-IMF bail out is a devastating comment on the parasitism of the global financial aristocracy. The banks are raiding hundreds of billions in public funds, which will increase already bloated state debts -allowing governments to press for further social cuts against the workers. The fact that such measures pass testifies to the total subservience of the political establishment to the super-rich.

Like the $800 billion bail out arranged by the US government after the collapse of Lehman Brothers, this money is being handed over to the banks with no questions asked -though taxpayers justifiably could insist that, in return for their money, the banks be nationalized and run as public utilities.

To me the bail out itself will do nothing to resolve the underlying debt crisis. Though it might delay the bankruptcy of certain European countries, such a bail out would not repay their debts or reduce their budget deficits. Its funds would be earmarked not for productive investment, but to temporarily avert a collapse of the financial system.
The underlying issue—the terrible economic growth prospects of the southern euro zone countries and Ireland remains unresolved. Unless these economies can avoid deflation and get their economies growing, they have no future in the euro zone.
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Old 11.05.2010, 22:42
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Re: There are bad ideas... [trillion dollar support package for the Euro]

IMHO as an economist, I’ve always felt the whole system of a common currency is highly likely to fail and European countries will continue to behave in their individual interests when it counts (save a few exceptions).
What does this crisis tell us?
  • European economies function independently, and a single interest rate and level for the Euro will never work for both Germany and Greece.
  • The massive EU and IMF fund will permit EU states not meeting economic membership requirements and falsifying national statistics concerning debt, to default on their obligations and most likely anything borrowed from the fund. Shifting the losses onto EU and IMF balance sheets. In essence, if the benefits of an action accrue to the agent but many of the associated costs can be shifted to another party, then such actions are likely to recur. Today Greece, tomorrow Spain and Portugal (minus the fraud hopefully).
  • Considering Greece, its welfare state is dysfunctional. The effects of this recent economic problem threaten its bond ratings and it is in violation of the fiscal rules of the European Union. All the while the value of the euro is threatened. Yet the German government is planning on bailing out the Greeks with debt guarantees to avoid contagion effects.
The Greeks cannot change their welfare system, let’s take for example the retirement age in the public sector of 53, this is ridiculously low and people do not sufficiently contribute into the pension system to balance their utilization of it post-retirement. Yet they can’t increase the retirement age in the current climate, as unemployment rates will increase, it’s a quandary. Meanwhile, the German retirement age is 65 (or thereabouts), and people contribute a significant portion of their earnings into the pension system, with the government assisting failing EU states financially their own debts rise and fiscal performance declines, don’t count on collecting that pension cheque 30 years from now.

There’s no easy solution to this mess, I’d personally get the Germans to pull out of the EU (which they’ll never do, due to their fragile, historically influenced, geo-political situation). Germany is the world’s 2nd largest exporter, I doubt the Greeks will react to Germany refusing to contribute to a fund, and if they do it’ll be a short-term blip in Germany export performance, a sacrifice worth making in light of long-term economic stability. Germany’s people know this, and rightly oppose bailout plans primarily designed to protect banks and other institutional investors. They want efficient fiscal governance and open markets, which means allowing the Greek people to re-build their financial system, and giving them (not banks) aid to mitigate the shock. This needs to occur outside the European Economic and Monetary Union.

I’m tired of typing now, but I was growing weary of couch-economists spout nonsense. What do I know though, I’m just an economist. Economics is…after all, just voodoo
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Old 11.05.2010, 23:26
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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IMHO as an economist, I’ve always felt the whole system of a common currency is highly likely to fail and European countries will continue to behave in their individual interests when it counts (save a few exceptions).
I’m tired of typing now, but I was growing weary of couch-economists spout nonsense. What do I know though, I’m just an economist. Economics is…after all, just voodoo
I agree with all of the above

Plus
"Ulrich Leuchtmann, currency chief at Commerzbank, said it is far from clear whether EU states can cover their pledge, since most have their own debt problems. "Not even the eurozone as a whole has sufficient finds to provide for member states in trouble. The volume of aid is likely to be much smaller than the official figures suggest," he said."
From the way the markets moved today it looks like enough people agree with this statement and are testing the EU states to see if they will really pay out & make good on their promises of funds.
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Old 11.05.2010, 23:31
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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I read the Swiss central bank is spending a ton to artificially retain a parity with the Euro, namely because it is an "export country." Would it really be so bad to walk away from a Euro pegged at 1.40 chf? Perhaps the franc could enjoy a kind of renaissance as a reserve currency.

It seems like a bad move to try to keep parity with a sinking ship. (sorry if my logic is unreasonable...I am no economist, but would like to learn more.)
I believe the Swiss central bank stopped doing this last week; there must be a limit to the amount of money they can print to buy the euro (which is a declining asset). It is like throwing money into a hole in the ground.
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Old 12.05.2010, 02:38
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Re: There are bad ideas... [trillion dollar support package for the Euro]

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I read the Swiss central bank is spending a ton to artificially retain a parity with the Euro, namely because it is an "export country." Would it really be so bad to walk away from a Euro pegged at 1.40 chf? Perhaps the franc could enjoy a kind of renaissance as a reserve currency.

It seems like a bad move to try to keep parity with a sinking ship. (sorry if my logic is unreasonable...I am no economist, but would like to learn more.)

A) No, Switzerland has to fight to keep the exchange rate of the CHF down to a sensible level. The export industry is the important for the survival of the nation
B) The CHF IS a reserve currency
C) The Euro is not a sinking ship, but a community who uses the problem of one of its members to lower the exchange-rate in order to improve the position of its export industries (to the detriment of those who are not yet in the Euro). 70% of all Swiss exports go to EU countries, and so Switzerland is to take action. The whole Greece crisis apparently has already now cost Switzerland some 2 billion of CHF ! ..... or more
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